Viresh Joshi, the sacked fund manager and chief trader of Axis Mutual Fund, has sued the firm for wrongful termination and demanded Rs 54 crore in damages. A suit was filed in Bombay High Court by his law firm Mansukhlal, Hiralal & Co.
Filed earlier this week, the suit is listed for hearing next week. The termination is claimed to be null and void by his lawyers as they cite absence of the due cause by AXIS MF. His lawyers also claim that Joshi wasn’t given an appropriate opportunity for a hearing.
Joshi was suspended on May 3 along with assistant fund manager Deepak Agrawal following a whistle-blower complaint alleging front-running and violation of other securities law.
The fund house also roped in two agencies to investigate the front-running case. The agencies have been tasked with identifying lapses, ascertaining if other individuals were involved in any way and also finding the amount of illegal gains that could have been made.
The lawsuit comes after a legal notice Joshi’s lawyers sent to the fund house on May 20, seeking a detailed explanation as to why he had been sacked. Axis MF has not publicly disclosed the nature of wrongdoings alleged to Joshi that it has been investigating but has maintained that there have been alleged violations of securities law.
In May, Securities and Exchange Board of India (Sebi) too launched a separate probe into the matter, raiding multiple cities to gather evidence on alleged front-running. Multiple news reports cited various records, documents and digital evidence from phones, laptops and hard drives used by 16 suspected entities.
Since 2009, Joshi has been associated with Axis AMC where he handled managing arbitrage fund & derivatives trading strategies. He also oversaw Axis Arbitrage Fund, Axis Technology ETF, and Axis Consumption ETF.
In 2015, Agrawal joined Axis AMC 2015 as a research analyst, equity and was later promoted to assistant fund manager (equity) two years ago. Since 2021, he has been managing the Axis Quant Fund and the Axis Consumption ETF.
History of the issue
On May 20, Axis MF terminated the employment of Joshi, a chief trader and fund manager, due to alleged irregularities. Axis MF hadn’t cited any reason for the termination.
The move comes after the company suspended Joshi and another fund manager earlier this month for alleged irregularities involving crores of rupees including front-running transactions on their personal accounts.
Front-running, which is illegal in India, involves purchasing a stock based on advance exclusive information regarding an expected large transaction that will affect its price.
Sebi has categorised front-running as a form of market manipulation and insider trading, and penalised several fund houses and fund managers in the past over this activity.
“Further to our investigation, his conduct and following the decision to suspend him, the employment of Viresh Joshi (Chief Trader & Fund Manager) with Axis AMC has been terminated with effect from May 18, 2022 and he will no longer have any association with Axis AMC and Axis Mutual Fund. Accordingly, Viresh Joshi ceases to be a key person of Axis AMC,” the fund house said in its statement.
“We take compliance with applicable legal/regulatory requirements seriously, and have zero tolerance towards any instance of non-compliance,” the fund house added.
Prior to working at Axis AMC, he has worked at BNP Paribas Securities and ICICI Securities.